Answered

Discover a wealth of knowledge at Westonci.ca, where experts provide answers to your most pressing questions. Join our platform to connect with experts ready to provide accurate answers to your questions in various fields. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently.

A $63,000 machine with a 7-year class life was purchased 2 years ago. The machine will now be sold for $50,000 and replaced with a new machine costing $75,000, with a 5-year class life. The new machine will not increase sales, but will decrease operating costs by $16,000 per year. Simplified straight line depreciation is employed for both machines, and the marginal corporate tax rate is 34 percent. What is the initial outlay for the project?.

Sagot :

The incremental annual cash flow associated with the project is $12400

What is incremental annual?

Sales resulting from a higher volume of sales are known as incremental revenue. Establishing a baseline revenue level and comparing changes from that point onwards is required to calculate incremental revenue.

According to the given information :

Depreciation=[($63,000/7 years)-($75,000/5 years)

Depreciation=$9000-$15000

Depreciation=$6000

Now let calculate the Incremental annual cash flow

Incremental annual cash flow

={($16000-$6000) - [($16000-$6000)*34%]+$6000}

= {(10000)- [10000*34%]+6000}

= {(10000) - 3600+6000}

= {16000-3600}

= $12400

Incremental annual cash flow=$12400

Therefore the incremental annual cash flow associated with the project is $12400

To know more about the incremental annual visit:

https://brainly.com/question/22784283

#SPJ4

Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. We hope you found this helpful. Feel free to come back anytime for more accurate answers and updated information. We're glad you visited Westonci.ca. Return anytime for updated answers from our knowledgeable team.